Glucocorticoids (GCs) are potent anti-inflammatory agents that are widely agents that are widely used in the treatment of rheumatic diseases, including rheumatoid arthritis (RA) and systematic lupus erythematosis (SLE). GCs represent a highly effective therapy, but use is limited by side effects. Thus, there are extensive efforts underway to understand the mechanisms underlying the anti-inflammatory effects of GCS, with a view towards designing novel therapeutic compounds that avoid the limiting toxicities associated with long term GC treatment. A large body of evidence suggests that one major mechanism underlying anti- inflammatory actions of GCs is the expression of cytokines and chemokines, including IL-1, IL-2, IL-6, IFNgamma, and IL-8. This suppression is accomplished by antagonizing the AP-1 and NF-kappaB transcription factors. Although blockade of AP-1 and NF-kappaB action would partially block signaling by IL-1 and TNFalpha, this mechanism does not affect signaling by cytokines, such as IL-2, IL-4, IL-6, and IFNgamma, which utilize the Jak-STAT (signal transducer and activator of transcription) pathway for signal transduction. Limited information exists concerning the effects of GCs on Jak-STAT signaling, but the recent description of physical and functional interactions between glucocorticoid receptors (GCRs) and Stat5 led up to explore the interactions of GC and Jak-STAT signaling. Preliminary results demonstrate that pretreatment of cells with GCs leads to suppression of STAT activation by IL-2, IL-4, and IFNgamma, but not IL-6. Inhibition of IL-2 triggered Stat5 activation correlated with suppression of gene activation and proliferation. We hypothesize that GCS suppress cytokine signaling by inhibiting the Jak-STAT pathway, and that suppression of cytokine signaling is an important component of the anti-inflammatory effects of GCS. Two independent levels of action of inhibiting both the production and activity of certain cytokines may explain the anti- inflammatory potency of these agents. These hypotheses will be tested in the following specific aims: (1) To delineate the mechanisms by which GCS inhibit signaling by cytokines that utilize the Jak-STAT signal transduction pathway. (2) To characterize the functional consequences of GC inhibition of cytokine signaling in the context of the pathogenesis of SLE and RA, and determine whether the suppressive effects of GCS are mediated through inhibition of STAT proteins. (3) To determine the mechanisms by which GC treatment of SLE and RA patients lead to suppression of cytokine signaling by the Jak-STAT pathway in vivo.